Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Mattel's Fourth Quarter and Full Year 2022 Earnings Call. All lines are placed on a listen only mode to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

At this time, I would like to turn the call over to Mr. of President Vice Zbojniewicz, Investor Relations. David ahead go sir. Please

David Zbojniewicz

everyone. Thank and afternoon you, good operator

Officer; Mattel’s Ynon Joining Mattel’s Richard Operating Officer; me President Anthony Kreiz, Chief Chairman today are Mattel’s and Financial Chief Officer. Chief Executive and and DiSilvestro, Dickson,

Mattel’s this year and reported results. fourth quarter As you we XXXX know, afternoon, full financial

and Ynon begin we time some will with providing Anthony take on and Richard questions. to will We call our commentary provide for Anthony today’s results, which, Ynon, after

you with discussion our help provided we To slide today, a have supplement presentation.

discussion, presentation, and taxes, earnings flow; gross depreciation, Our measures, free currency. and amortization adjusted income margin; may including EBITDA; cash and net other income EBITDA; adjusted free and loss earnings operating adjusted operating administrative adjusted adjusted release and tax interest, or or or cash financial slide adjusted reference loss expenses; conversion; adjusted adjusted non-GAAP share; constant debt, per leverage gross margin; flow ratio, and selling profit rate; before earnings

present In presentation and a refer referenced as stated in our in changes constant that be key billings will to gross gross currency addition, billings may call note Please in otherwise. on that figures we we stated indicator. billings performance billings, this unless gross

when be sync viewed slide section Our can presentation it with you today’s through our website, in corporate.mattel.com. call corporate access of Investors the

slide key The Investors website. both information and the our included our well indicator corporate performance required available release presentation regarding by also Regulation information is and G our regarding of as non-GAAP financial documents as measures section in in are earnings

when between company’s financial closing arise as of result the completion current The preliminary developments and the the of most press final accounting final procedures, the the registered results. of differ that of results Form public slide financial represent and company’s firm, may disclosed by other information now a disclosure review the the results and XX-Q, independent its to adjustments, completion company’s preliminary these in may available the management. from in release The included actual results, presentation

call Before lines. including our we related that the you the to are forward-looking, to product made during categories, of like begin, statements and performance I’d caution business, brands, certain statements future

statements are, they number based subject by those the These information future uncertainties currently are and uncertain. to are risks statements on results about and our and from of cause available in to differ we Any their assumptions that significant make the nature, forward-looking statements. projected actual a could

with make disclaims we statements filings the of to and so, Mattel XX-Q, except SEC our XXXX described Form obligation not We of the the forward-looking our does to expressly release in time, these on as by public statements. as quarter some Risk section our and any annual earnings first the presentation do update uncertainties Form on report time XX-K, as required report in other from well Factors law. other XXXX and quarterly

Now, to over the I'd like turn call to Ynon.

Ynon Kreiz

Thank our you year XXXX earnings fourth and quarter for full joining call.

existing to promotions and to offset increased to more inventory cautious by consumer their retailers was a This November. and approach lower as stock. enough and expected double-digit growth led our We POS Our but than the as POS quarter, entered did later in were challenging results came more December, expecting see growth environment including was macroeconomic the quarter fourth quarter We to the below anticipated. accelerate. in anticipated replenishment than October in discounts manage it expectations they not and demand than their

year, annual environment, Our company's including had full which growth we on expenses operating but manage decades. impact XXXX, our gross fourth higher the growth achieved net for sales results. helped over Despite the lower in cost very inventory, was to in challenging year negatively highest the bottom reduce line by the in margin constant our affected rate currency consecutive

financial strong ratio debt, the improved our footing. further and ended on year lowered leverage We

has been it Our flexibility best balance sheet execute which strategy. in is will provide to more years, position our the in

fourth or million. EBITDA constant to Looking net to million. financial $X.XX as to the declined and in per share declined prior $XXX declined sales adjusted to $XXX Adjusted compared in earnings $X.XX year, million the currency. $XXX XX% $XX quarter Adjusted declined at metrics XX% key operating income million

POS the for it NPD. this the and quarter fourth regions. mid-single and years. in quarter market gained was was up eight historical in POS four share fourth quarter all up context, highest per Mattel the digits Mattel's outpaced Putting industry in in

earnings prior in year constant as all Looking in net at up financial in metrics flat operating gross and times declined with EBITDA X.X regions. compare ratio income declined year Adjusted for a Adjusted key million. $XXX billings four the to X.X declined X% were Adjusted sales year, $XXX X% leverage compared to million full to X% the to to improved currency by ago. per share or XX% to growth $X.XX. and

to over believe market and XXXX, pandemic. growth and industry, a toy flat in to to prior XXXX We industry to and following was we pandemic, industry That constant we impact year will said, a year the XX% toy four demand, the the up currency double-digit in continuing the may toy full to second adjusted XXXX expect continue results slightly record. for the and on consumer resilience low to more prior was of it POS is doubled. two regions. volatility highest all XX% in up macroeconomic in that EBITDA up be industry finished years XXXX, expect up grew years industry compared growth sales and year POS than its the digits single The highest before record and given despite compared and the headwinds to Comparing nine the show to continued than challenges. XXXX. macroeconomic were time. more year in flat net Per NPD, This grow

Infant, significantly in and and Looking billings and down outpaced category. the categories, or Toddler POS strongly. at for challenger gross flat and Challenger billings as Dolls, replenishment was in Dolls, categories were and ITPS. constant reduce for currency Vehicles Preschool orders, was gross Vehicles In up ITPS retailers fourth our aggregate, quarter, significantly by positive

year, Per grew the while NPD, US categories number ITPS, vehicles low full where in Dolls, Vehicles digits. declined. categories, one Dolls low-single in meaningfully Infant, digits, and toy number for and gross the billings ITPS and POS For and POS both challenging double categories, globally and Challenger in grew was vehicles Dolls and and fourth declined for Preschool overall the Toddler full Mattel leader company year. our one the quarter for

Friends quarter. to brands. brands billings gross our were was significantly our and Thomas up As power reduce power significantly each strongly. it orders, down Fisher-Price Hot of relates replenishment for outpaced and retailers as POS & Barbie for the Wheels

following years of was including growth, down For double-digit year on the highest the Barbie two full record. year,

confident growth. strength are and We very Barbie's about continued long-term

both Hot its POS performed digits was and Wheels and Hot low-double well Fisher-Price quarter the and were and Wheels Barbie, year, Per POS Thomas' one achieved up the Fisher-Price Barbie fourth number property respective each Thomas while number overall. two full declined. extremely their digits. consecutive NPD, global Fisher-Price Hot and and Barbie year. property in were global was low-single and record for Wheel's down the fifth categories,

expand toy grow multiyear our IP-driven performance, strategy we to Mattel's at Looking been successfully entertainment our offering. and have business executing our

individual Inherently, to global scale assets whole. well by leverages a allows category, and and year. quarter our there capabilities portfolio us is brand by But by genre, balanced and and varying and channel. takes our our portfolio will retail by demographics business be as puts Our target model

for fourth year, year not our a the by throughout timing quarter the of story and While trajectory. holiday tell skewed movement business, retail our results the both expectations, our and more of performance heavily the below in by growth was the in quarter were Notably, context inventory POS of the volatility complete multiyear full growth fourth the marketplace underlying the year. with results

on priorities. we another meaningful made year XXXX key progress was where

the just within are new to the in in number skate. Monster remote We Wheels High fourth revitalized relaunched highlights. as which a few Here one We property relaunch quarter. US such and categories Dolls control the Hot and expanded was

continued extensions Frozen, Disney We key and with strengthen licenses, and our of the companies Princess major to including Trolls. or with additions Universal's Disney Pokemon relationships entertainment

of over capitalizing DXC built-in franchises traffic over on grown the volume which strength XX%. increasing Mattel We collector base, Creations, by have and XX% and our by is our business, fan

program our million Growth $XXX targeted $XXX goal $XXX from XXXX achieved savings savings the to We XXXX for cost cost from million in million. of increased and Optimizing

We capturing also Warner is in value Abrams' J.J. The motion that towards Bad of develop Matchbox a movie its production as meaningful principal IP. to summer. Media the release movie Skydance global on full post of announced progress live-action this with will made and Robot theatrical our our part Barbie slate photography the Hot Wheels completed We produce picture and partnered development growing with Bros.

Mattel The joint musical is venture NetEase open gaming movie specials, the over million Adventure our which construction side, fourth in premiered XXXX. under at launched series is the the live-action television And and On expected to and quarter Nickelodeon mobile Paramount+. grew $XXX MattelXXX including we revenue. Monster High, of Park to in with and XX first

continue a ahead macroeconomic we XXXX, look As foresee period impacting of demand. volatility challenges to consumer to and we

returning factors two incentive inventory levels, a will which XXXX that are our SG&A. target impact will negative will compensation increase significant levels, top there These and are our to impact which line retailer onetime Additionally, performance. have elevated on

$XXX With $XXX net range year in in to adjusted EBITDA XXXX currency that sales context, and to be to full of for comparable Mattel expect in be to XXXX, we constant million. the million

year. We for demand positive aim and gain outpace industry the our consumer the in and growth assumes to guidance share. for product market POS Our toy

Beyond will XXXX, strategy bottom-line top growth. and we believe drive our

for below of the even currency strength fourth consumer challenging demand macroeconomic and expectations, environment. to the a in our increase portfolio as In growth year was product speak a in closing, whole, constant the quarter in our while full

offering our XXXX. expand shareholder repurchases expect grow positioned financial and long-term to we believe resume our business in to well our strategy, entertainment we to improved share are Reflecting position in executing our our and strategy IP-driven confidence toy multiyear create value. continue and We

And We purpose develop updating entertain, generation through wonder strategy of upcoming innovative at on are that play. their childhood to to inspire, and the to committed the to our of reach and progress potential. We next mission explore products experiences to our the create full Investor and Virtual to presentation. look children you empower our Mattel's forward

Anthony will detail. financials more cover the in now And

Anthony DiSilvestro

Ynon. Thanks

of As which impacted with a our Ynon relative will guidance. below mentioned, Mattel's fourth quarter negatively was those expectations. performance discussion items, I to performance start

anticipated. than proved challenging expectations consumer as Our or below takeaway environment was macroeconomic the more POS

incurred fourth Retailers anticipated we absorption well more negative in reduced the and cost as manage sales, closeout orders inventories, than our sales from costs to impact including lower fixed replenishment quarter. as the higher we

sales With year With to or expectations, the while reduced XXXX. mitigated billion, down the which earnings POS the we in compared fourth $X.XXX prior context, mid-single-digits net quarter, the impact that constant currency. increased XX% in by down significantly were shortfall to compensation, incentive XX% in

levels inventory to $XX managing margin Adjusted operating million. EPS cost declined by by $XXX and points, reflecting adjusted declined the of declined million gross $X.XX basis and $XXX million, by to million $X.XX $XXX to declined inflation. XXX adjusted Adjusted impact EBITDA income by

in Adjusted X% the was lower million million, sales compared Looking due full $XX to partly flat and to at managing XX.X% EPS offset reported SG&A. adjusted inflation, margin declined gross cost Adjusted lower year or constant X% due net cost increased margin points by increases our cost by gross to offset million year, royalties, in million the prior were while $X.XX. to by savings. operating income basis or declined higher $X.XX by primarily EBITDA XXX results, $XXX Adjusted and partly adjusted currency. to declined as inventories, price adjusted $XXX to up primarily $XXX of

Turning to beginning constant the gross with quarter. billings fourth in currency

discussed gross outpaced holiday inventory inventory, billings building ahead calls, replenishing exiting POS season. prior first of as retailers lower we've levels on the were and year As half prior the

fourth third the We POS in expected quarter this and in the outpacing billings. to quarter, gross reverse accelerate with

and quarter, lower the Although orders across POS This caused the which our regions. replenishment did retailers demand later improve consumer outpaced to fourth than performance impacted quarter, and came categories in and reduce shipping expected. was throughout

company With that quarter, context, in gross while declined digits mid-single POS billings by the increased Total XX%.

and early billings category, in Princess American by was Barbie growth partly XX% Monster with Looking Dolls at declines shipments down and of in Girl, the Disney by quarter Disney Frozen. High and in fourth gross offset

driven quarter XX% in Barbie X%. Preschool was digit industry XX%, down Wheels successful globally Toddler while share and Infant, share control of Barbie and POS double Mattel fourth the Toddler Hot per number flat. by market with launches the and declined XX%, one grew in in NPD. and and quarter gained growth billings and declined category skate. global gross NPD. outpaced was the POS in gained Preschool the Infant, remote per Vehicles

was Games Building Challenger comparable to sets year. categories of XX% due lower Plush. the in prior aggregate to sales Action declined Figures, and

company declines billings early and and X% total in growth Barbie, year, American Princess strength grew by low gross shipments For partly Spirit, Polly Monster digits. Dolls X% in in increasing to the Disney single down offset Girl full and Frozen with POS due on was Pocket. Disney High,

to by Imaginext Wheels XX%, Matchbox. last years driven growth Wheels Year of impacted the XXXX and cars, quarter, by due and higher been Vehicles declined facing following was and two Hot and Barbie and grew baby Hot performance consumers. in offset have XX%, core Little American category of and primarily declines partly macroeconomic gear, down priced discussed As grew to expansion. Girl characters. soft Trucks items diecast challenges Girl XX%, X% of was double-digit Toddler driven Monster historical sales in X%, negatively due Infant, for by infant, Preschool by People. down growth.

for categories partly action and per the XX% building in declines year by with offset overall, outperformed share the full Games. increased gains gained industry in global Challenger Plush and sets, Mattel NPD. and figures

Ynon and our the inventory fourth throughout were the of As with the for and growth performance mentioned, movement POS business heavily marketplace skewed in quarter results the timing by underlying of quarterly year. not volatility both by retailer year,

into North up quarter in Looking constant with POS digits. levels inventory as up dollars low-single declined fourth XXXX. good Asia America currency Ending weeks ago levels high-single increased head POS X% is POS And both and in are of increasing year mid-single America EMEA billings Retail mid-single inventory declined digits. POS XX% while Latin with predominantly of elevated by digits. retailer compared were to X% we declined and Pacific current supply region. increased at XX% declined low digits. gross and quality. a and

high-single in POS North our four Mexico the markets. of gains America with gross low-single digits. EMEA digits. key all up with POS For grew increased increased with POS billings full and grew regions. in Latin X% billings strong Brazil. and digits. increased increased gross POS year, each in low-single XX% X% growth America

China. Asia grew impact Pacific Australia and in offset the of X% gains with by in sales closures Japan, COVID-related

other Mattel declined XX.X% one margin sales and associated of offset US basis with absorption primarily EMEA and America. two XXX XXX and XXX The XXX increased of mid-single points. XXX inflation gross year, the number was POS positive the basis cost cost and points, increases, had due to from digits. Growth points. of program, inventory fixed quarter. negative contributed lower of volume impact the basis XXX increased was in Per of points, several NPD, basis to a were basis basis These and royalties our Optimizing XXth decline in points obsolescence which basis Latin closeout one number Adjusted points consecutive savings for in factors for in which factors: partly number by price XXX management, points

year, For points full declined margin basis the adjusted XXX gross to XX.X%.

lower expenses to declined million quarter, volume. in down advertising to fourth advertising response the In X% reduced we as $XXX Moving P&L. to

advertising SG&A year, $XXX debt net the X% basis was $XX significantly bad due decline XX in million, XX%, percentage cost points by incentive as million. Adjusted declined sales reduced and quarter to expense full or of declined declined compensation partly well a X.X%. The in For to savings, increases compensation offset expense. to the fourth as and as primarily

the offset due million a by by adjusted the million to lower adjusted was SG&A. Adjusted $XXX to by margin, EBITDA year ago. million impacted factors. $XX The gross was and $XXX in operating fourth income compared same and sales decline Adjusted to million, $XXX quarter advertising lower declined partly

in by operations from in improvements primarily to usage, $XXX items. The million, decline the net excluding the working non-cash for year. to impact of offset was capital the was million prior partly higher income, year compared due Cash full $XXX

increased was to in compared $XXX and fashion lower due from investments cash million, growth. to expenditures the Free was capital in year. flow $XXX future million, dolls to and $XX expenditures. cars by production capacity cash increased increase million prior million reflecting Capital to die-cast decline $XXX to support The operations

free compared to prior of was percentage conversion EBITDA, flow in adjusted a cash the XX%, As XX% year.

a of balance was at X.XX% debt. $XXX million, used cash $XXX the notes the balance Taking million finished XXXX. reduce free the prior look compared year, primarily with flow $XXX a In the We in year quarter, we million, fourth as cash sheet. the redeemed due to to

prior debt million quarter was Inventory or Total net reduction million $XXX billion compared of an billion, the to a increase $XXX million, receivable XX%. $X.XXX $XXX fourth $X.XXX to prior was million, in $XXX Accounts year, million. $XXX in due by the year, compared decline to of to in the $XXX million sales. declined primarily

compared end at to improved in X.X the year. year, the Leverage ratio X.X of the times to times prior

continued Moody's rating upgrade our as highlighted by Investor metrics, credit investment credit Services to grade. by to our action improve the We recent to

million We continued the of cost exceeding million. the for to to Optimizing quarter and were $XX million generate $XX $XXX forecast year, for savings. gross savings significant million in $XX prior full our

the $XXX XXXX, goal increasing to now the we implement to Since our focus and be savings. XXXX actions the million continued cost our Based from on are program, when progress expenditures we including optimizing $XXX forecasted operations, to have annualized million further structure, $XXX on million. saving estimated of million $XXX $XXX achieved million. organizational program targeted launched our cash streamline we to Total to are

foresee said, consumer. looking Ynon ahead and As macroeconomic period impacting to of we a to XXXX, continue challenges the volatility

four compensation onetime two Anticipated the our increase and levels incentive by million. target points of are to SG&A will a percentage in $XXX topline, will negative factors impact our half first reductions significant performance. retail to there on impact that approximately returning inventory will XXXX Additionally, three have particularly

year Infant Challenger our and net Dolls the Preschool and action as the full comparable lap year Vehicles with in to sales by declines and in in aggregate, categories, to expect categories to prior be Toddler in in offset XXXX. we theatrical due primarily in we tie-ins that figures With currency growth context, constant

demand positive our with POS performance for the growth assumes Our guidance product in for consumer year.

expect for respect With brands, to and the Power Barbie grow Hot we Fisher-Price and decline. Wheels to to

the clarity Fisher-Price will Thomas forward, brand Friends, greater exclude on brand's Power allowing Going the & performance.

In connection and and movie movie-specific IP. includes for as producer estimated the toy licensing The with in our participation XXXX sales, Barbie approach, capital-light success of a the fee, movie, part guidance

our is translation currency impact spot a Foreign slightly positive on based to on rates. performance expected current have topline

in cost approximately XX.X% absorption cost to expected we second pricing Adjusted fixed volumes. with increase by the gross benefit partly offset savings, half. XXXX. respect expect to and inflation compared gross and timing, margin from is to anticipated the This to production reflects lower in associated XX% the improvement cost margin With

we expected the SG&A In relatively is to is as the as expect of to net percent stable to compensation sales. to while incentive levels, return a middle advertising P&L, increase of target forecast remain

expected is of supporting to to EBITDA of higher capital EPS we performance. adjusted previously per million Adjusted in conversion of $XXX be XXXX. to a to spending announced. to XXXX in Interest expense and share. the our in be expected by $XXX are million growth $X.XX continuing is includes range million, range million million XXXX in to in capacity expected future the $XXX and XXXX. Capital range $X.XX $XXX of spend driven in Anticipated is XX% million expected forecasted compared be to expenditures $XXX improve as XX% adjusted ratio to exceed to benefit dolls XXXX X.XX% of flow the in as tax the forecast Free increase approximately fashion notes cash be in XXXX working die-cast to XX% end of is $XXX to to from compared the the and to rate $XXX is the million at redemption cars

year, be XXXX. and line inventory In to bottom we be in reflecting significantly in and to growth by last in is terms down the XX% retail reductions further of as first sales are and expected expected growth This anticipated the half. phasing, wrap second top followed line half earnings top

uncertainties. demand. to further the risks is in guidance impact unexpected aware volatility, operating company disruption a and but We considers what and The environment other inflation may that subject with any of are remains higher macroeconomic market including today, consumer challenging volatility, macroeconomic

shareholder allocation expect to improved sheet outlook to million XXXX our our balance This confidence share with remaining flow, increased company's and under in approximately and free with authorization. our consistent for we significant current reflects create strategy capital resume in value. repurchases With long-term priorities the cash action $XXX is

agencies. While further capital quarter continue XXXX, the we virtual market priorities deployment upcoming rating an to our Mattel's investment-grade forward investor financial three on to and one outpaced from and fourth debt outlook more position, sharing financial In improve our at we Moody's, of and look ratings below We expectations, industry our was our presentation. information reduced the gained achieved share. major

for your operator today, over it Thanks time and I now for Q&A. the will turn to

Operator

comes for Handler floor your Instructions] first The from question now open MKM. of questions. Your is [Operator Eric Roth

Eric Handler

And sense point you wonder a inventories? give levels you point year? perspective this question. normalized to far follow-up. at you normalized some Thank Like like of on how are specifically, back our get evening. then get retail. a at at Good I do I've for if a to got the during And little how willing they below retail Anthony, levels inventories could just the

Anthony DiSilvestro

Sure.

So retail situation. let inventory me on comment the

quarter also inventory level we we and levels say as weeks quality. they a look and inventory of are And actually to predominantly of at current that and XXXX. year-end As up end into that's head both I that will those good XXXX coming levels, are dollars also into comparing and in elevated low they are supply retailer at

this will retailers globally And reduce inventory issue the to the XXXX issue is is, and X of half And our expect negative in guidance approximately on And again, occur our percentage levels XXXX. sales that's guidance X of a points. our to we is have to that's reflected in first and most we've XXXX. forecasted in impact what of in this

Eric Handler

then consumers to strong relatively impact? but that you've up and given they've a – price control given added skate, and in quarter. that I that the know got spot just Got was for see pretty points, it. was curious, was low that it And remote Wheels sweet I'm fourth good given Hot

Richard Dickson

really It die performed by bringing incredible up particular, performance assortment, growth cast in was fueled segment Truck in well. the across an brand, Wheels. was you The our Monster performance Wheels Thank exceptionally XXXX. but strong Hot for Hot

had incredibly two segments. new innovative also We exciting launch

We the exceptionally well. performed as Hot Wheels category as RC Skate, are in well which

for achieved its billings. also was year full year, the fifth This consecutive gross Wheels Hot record-breaking of

one the assortment investor Hot continues toy the Wheels way, world you momentum property also, in number categories. Vehicles we're the looking property remained and more was sharing at all Hot car number Wheels' forward basic across with best-selling we're the confident by incredibly and the really number event. one virtual Our in the toy The five globally long-term trajectory, and to

Eric Handler

Thank you.

Operator

Your Megan next of from Alexander comes question JPMorgan.

Megan Alexander

Hi. taking XXXX. It bit XXXX. like time expectation my POS maybe maybe bit a expecting Thanks the of than a on I for is which question. for X% you're POS to X%, in spend little up to want seems better little

a mentioned volatile that the fact levels. environment times retailers You several and inventory are reducing

consumer clearly given better it So year. maybe we last like than XXXX factors? XXXX in confidence a you being what weaker drives understand can POS And just in these help than seems have us

Ynon Kreiz

Megan. Yes, challenges. pre-pandemic. essentially toy to in two XX% still continued was and to record of year industry Hi, resilience over industry spite toy look, the despite but its years in the show of the a XXXX And macro economy, after XXXX, double-digit the year, flat growth relative so up the

to over grow the resilience to this believe and toy time. is will we continue speaks industry industry strength the of industry a and the and that that growth So

spending that affect consumer expect we do impact consumer is and may we what said headwinds macro that challenges, given continuing also demand. the Now

of be our product. So good are XXXX for we slightly industry flat a for POS will to but do Mattel. good still sorry, believe we off obviously, up terms in the to achieve we start expect slight the positive -- we It's environment, overall XXXX. is demand outperform this early, a start. In to in consumer industry, seeing

channel, of by We initiatives brand, composition that well for target feel by confident category, by all, have our you're and familiar with, into about we balanced the and on do key by top year feel of and drivers very It's in positioned all well retail portfolio. what heading we XXXX. demographic the several

Megan Alexander

a you. Thank then, maybe Anthony. Great. And for follow-up

phasing impact magnitude the the how understand half. down? be heavily maybe and much -- the mentioned to first X% growth to EPS. weighted of You of It you X% just us that heavily to the second should can sales be the line, help half top should On

to I'm is that the X% high maybe first half. impact low a math the doing If correctly, double-digit single, to X%

So more are? XQ should concentrated how because thinking much of And -- phasing help levels in half the retail is inventory heavily any first of is be where of it just about terms down. that the more in

Anthony DiSilvestro

Sure.

way won't top I XXXX in phasing are growth about expected have you as XX% for say to line so wrap be recall first billings that. two last it down and that half, we primarily to significantly, the have the parts we is, year, our it, gross to POS, outpace to XXXX, sales look and think think at the to earnings And in our right? I would

So that's be to reversal. going a

point anticipated addition in the And further, reductions retail in and reflecting inventory your to XXXX.

as of we're we wrapping in as compounding a year. anticipating have So terms effect what we're of well kind what this

Megan Alexander

you. Thank Okay.

Anthony DiSilvestro

lead second will bottom half, to this certainly, in And both line. top and growth the

Megan Alexander

you. Thank right. All

Operator

of Haas America. of next Bank Jason from comes Your question

Jason Haas

Hey, questions. my good Thanks for taking afternoon.

could up one, way how The was just size incremental Monster if High potentially I first Disney and you help this curious be any Princess/Frozen in year? for could you

Anthony DiSilvestro

content as additional well our with going on purchases. connection come we've momentum that's Well, continuing on performing year. was we top very Nickelodeon, rollout High the of partnership new content quarter, of with be incredible to ultimately this have our got that, the In and out, with global first quarter, motivating excited It to past the all, one for launches strategy inspiring full we are and launch. front, about the Monster this

it history fashion quarter. doll it great one for a brands with The ago itself launched. a spot of was bright itself. such have top We the our relaunch brand years the was when Historically,

number per on two relaunch and NPD XXXX United is the shelves this in there's in being only one States mentioned, As the for months.

be The in Paramount, franchise strategy excited and more We the movie rollout. a kids musical the global one movie performance action behind series, couldn't and was comprehensive content, live XX launched family course, with on the of this number about with involves countries.

obviously, an Princess, We've Doll our it the already of continued also, calling The High They've to industry rollout within started lineup. of itself dolls. global the Barbie leadership Monster portfolio, this There's New position Frozen obviously, year earlier Barbie and the incredible year. with shelves got, and products. is hit our Disney the theatrical,

Trolls. addition to that, Universal's we In also have

we more portfolio net-net, have. about the excited that So, couldn't we be

a more the And are doll Virtual be the at exciting in for our Investor We detail again, XXXX us. very business one number year and we a industry lot share category-driven will event. will

Jason Haas

you. expectation That's hear. great should then know mentioned for margin year. to see gross the for And we follow-up, I improvement that Anthony, the Thank that as a an be would Great. you maybe through

If the that talk you we are what Thanks. about cadence? extent I'm to to just more in puts that curious what any discounting first help the and expecting half the are way. takes year, can we of see on in could dimensionalize you or

Anthony DiSilvestro

for the Four margin pricing, the of this and are gross actions. drivers carryover two from primary XXXX, being XX.X% And Sure. drivers positive in XX% impact up that's us XXXX our guidance, mostly in forecasting year. we our

for optimizing Second is growth our savings.

this million increased of have goods cost said from million remarks, Ynon sold. and target of OFG the program majority we $XXX benefiting to As $XXX our in the

to as as continue by increases foresee than deflation more chain supply moderated packaging certain and material And significantly And we ocean our in then because in of that's in it's what on in COGS, markets freight, way, well other labor XXXX. items. some some in going inflation although offset rates we the some inflation see it's some happened although from

owned the reduce a in XXXX. fourth inventory levels, item, a with negative, bit plan which ended And then we is we which high to

do that, and which guidance production schedule factored cost a that into our as lowered well. comes negative fixed So our to absorption we with impact, we

Jason Haas

shouldn't clarify to Got there it. more XXXX? in That's I think -- the that past holiday XXX from just a to meaningful discounting a was XQ. point, at the related -- But the on like headwind half of margin this be headwind We're just that rate that in season. guessing we expect first for gross to I'm was bps

Anthony DiSilvestro

Correct.

Jason Haas

it. Thank you. Got

Operator

Markets. Johnson Gerrick Capital Your of next BMO question from comes

Gerrick Johnson

what, fourth about, you as in fourth no declined because good Hey, but quarter, have to quarter. inventory the the It well X% down you. Advertising in was afternoon. sell. that's last Thank year

and spend year, why advertising? this and more try plenty Why of do some demand that and POS? inventory, So, not on stimulate less stimulate

Ynon Kreiz

Yes.

to the is we heading POS make through given a advertising, into we gives us the actually real-time. media. assuming But our aspirations. volumes we spend flexibility to had as adjustments as and That fourth you portion on of hit in digital Gerrick, our planned quarter, increase So, see know, we went lower good did quarter,

made sales, basis we We volumes X.X% And advertising. saw of versus the wasn't a year. significant, net that XX X% come as and just so don't to adjustments I we in think. I little down It soft, our think, finished all last at some the year, down points

our drivers support our there full and spend a So, demand brands. products to and

Gerrick Johnson

there? And built Okay. This your in question again. I'm was shipped it fourth in you so much to asked much think will before, quarter? the Princess, wasn't but Disney do answered, guidance how the to What's it that year? contribute was going how ask

Ynon Kreiz

Yeah.

So guidance, again, category. in drivers of one give anticipated our as we, the growth Doll the is primary

to we've Princess. said, We've we Vehicles of Disney And expect so Barbie also As Trolls. got High. We've got We've inside the Monster that. all got got grow. movie Richard that's

So that those our the I and that's primary don't drivers, know Gerrick? are all inside of the guidance. answers key if question,

Gerrick Johnson

answer million? the $XXX question, No, million, would number $XXX like a

Ynon Kreiz

to going specific not down property. we're by it Yeah, break

Gerrick Johnson

It's Okay. you Well, ago. $XXX know left a a years we like was what, property roughly wouldn't million million $XXX it property Hasbro. six

between? in somewhere maybe So

Ynon Kreiz

comment, that what can't Disney to feel to have we new we opportunity great it We saying and exciting specifically. that But scale is and -- we levels. on in comfortable Princes Frozen and plans Yeah. very take Gerrick, are

Gerrick Johnson

Thank good. very you. Okay,

Ynon Kreiz

you. Thank

Operator

Andrew comes Uerkwitz Your of Jefferies. from question next

Andrew Uerkwitz

of question. was thanks trying I'm comments, for very a may have your taking to reconcile in couple just this Hey, the it because the comments earlier I missed and thorough.

Disney be Trolls Monster have be effectively for and to couple for calling are an up, industry zero to lines you POS High that the starting in up, you're be calling you're going You're year. from a to flat, of

kind up -- year. also will I for So and of be I'm think Vehicles just said curious the you

inventory -- and confidence moving where I'm bit on lines is, of that color Thanks. little the weaker of quality segments? through the could what's us you some give So your the a are of just those weakness those more on

Anthony DiSilvestro

Sure.

and decline and I in currency offset the guidance mean, Dolls Action constant again. Preschool XXXX. Todder, the Let categories, to primarily with we me top flat overall, line growth expect that's the categories, be in in unpack Vehicles by we wrap sales Infant, net Challenger Figures as tie-ins theatrical in

from it the for includes demand said, underlying We're points -- is industry positive. about anticipated measured in reduction one-time that's assuming to Our also POS. a guidance Ynon our slightly three inside toy that's flat growth percentage for by as four to as impact be guidance. in expectation consumer And levels, it the retailer the negative to and inventory

in we expect and the gain share industry implies that to that So XXXX. outpace market

Andrew Uerkwitz

for you Got you kind guess category second Thank impact What, and we clarity. expect American And Barbie question, the see I kind Monster could. in Disney that mix movie? if Doll Princess? And should what High do I my of the from between it. Barbie, and of, Doll

Anthony DiSilvestro

into the again, In more certain of assumptions Barbie success fee for toy related our movie and participation the then producer gave. the guidance into and the terms made that to IP, factored you the know, factored know, and licensing, movie-specific in we've estimated closely of and then the that's movie sales, we all, guidance you movie, impact

Andrew Uerkwitz

Appreciate Got much. it. you so Thank it.

Ynon Kreiz

you, Thank Andrew.

Operator

of next Your Arpiné UBS comes from question Bank. Kocharyan Investment

Arpiné Kocharyan

up still trying up anything How impacting would inventory levels of that Because between optimal second? of so understand or Is be you're levels as question. math were the significantly, Thanks. delta, that aggressive that comping took year-over-year? Because quarter which for that this very gap like percentage just -- much I'm to at How X big inventory not a Can surprising year something inventories is how significantly? sales in in there POS retail back up the up actions inventory? not not go are it taking you you can there's break quarter shows how to declines Thanks seems for the just XX% quarter it being because of to for full be and is year they inventory much to the weeks my as prior. by are exactly clean I given supply for close points. disruption to the chain

then to I that So a just have understand little trying quick better. follow-up. a And bit

Ynon Kreiz

Yes.

to and recognize decline quarter. the the in typical to pattern them inventory build the for I fourth to think is year three for retailer quarters then for thing through the of the first it

we QX. an inventory So reduction do typically in see

than in little in significant fourth although, So been the a it's And right, past. more quarter the unusual. that's not it's been

we're XXXX, As we've data at quantification impact. data, and they're line percentage correction we that is we on X to do the which and look levels, is elevated top points the inventory X got the good anticipating for retailer believe that of of

to going more into So little burn here XXXX. off

Arpiné Kocharyan

Okay. very margins declines. clear And that it's it's on Barbie, then hard when sustain Barbie very to

question is, guide Barbie EPS a Barbie you're be brand you're of from year. housekeeping discuss buyback? for take to X the kind super you core doesn't share case And margin grow. planning an on offsetting differential in in to sort in my versus there So just whether unrelated say High, And your High, it for Monster does would could happen question, that moment planning think then if helpful. you factors I of did growth Monster that What are

Richard Dickson

question I'll Barbie portfolio. So and with start overall the

outpaced global one fourth in NPD. per also and quarter. it's It number was share important quarter two fourth in recognize, off, also Barbie global First property the number the industry to market property actually global the the Dolls gained and industry the

to at we're industry. the Now share, category is performance the quarter volatility We're resonate down in strong brand for brand's significantly one expectations. we're consumers of to the in continues the below performance confident to continue environment, just dynamics overall position outpaced however, economic leadership in in was an of context the continuing way. that of our potential. this look movie And all we a the example And of expanding our long-term of of But profound health brand. of course, a with and really the very shipping. indication the course, its its is POS, It course, X% quarter, fourth reach. only grow which, was category expectation is takeaway, that. of retail When consumer

overall and per and in be NPD. world and Now year as category management, you in Mattel is both portfolio category full share important to which we our the to continues also grow the Barbie the lot asked, in part it's one the of Dolls Doll a portfolio, quarter the about talk number continued also recognize, really that in to the Doll category,

have of have in from context we the have incredible represents, the Mattel but for she course, of started hitting started happening collection leading course, be coming Princess shelves in things that notably, XXXX lines really of the lineup to the but And earlier already and the most year doll. the The category, Frozen Barbie, traction. for Barbie this gain are what will Disney theatrical the Doll that of product there year already pack

legacy rollout, global as of our the one Pocket, course, High, Polly strongest before, brands Trolls, and mentioned Universal's we addition Monster of as of well.

think again, Investor that So up detail category soon. in get scoreboard. much there Day is more on And really the winning will up really show I a hand in we'll doll great our the into coming

Ynon Kreiz

buyback? can Arpiné, the repeat you on the share And question

Arpiné Kocharyan

Yes.

or Anthony. very buybacks Does question share the Thank Just for much. includes guide a EPS you, you. Thank quick not?

Anthony DiSilvestro

Yes.

So really of outlook happy that to That’s cash XXXX. we expect a to able improved to in free improved announce our were flow. financial be resume we for our reflection repurchases share position,

in over It we've assumptions. and some under $XXX do consistent to reflected XXXX. we've with is that in expect We $XXX allocation capital XXXX remaining talked authorization And made million really about. got the current yes, priorities our it's we've million guidance. the And

Arpiné Kocharyan

you. Thank

Operator

Bolton Linda D.A. from comes Davidson. Weiser of question next Your

Linda Bolton Weiser

such issues. little inventory wondering could if decline in quarter. just it's on have color was a brand, American I shouldn't Since Girl Hi. mostly had it the channel XX% give a you DTC the

the much in curious just quarter. I'm was so demand Thanks. So down why the

Richard Dickson

primarily Linda. Again, in brands characters. reinforcing by Doll the alone most to portfolio. the the of one certain the our performance XXXX Year the soft let I'll historical Thanks, Yes. of treasured of decline and Girl in start due the truly industry, And this was Mattel is

our in retail, sales the are October than brand we offset a to Linda, proprietary But was did the sales in Girl premium majority like enough channels. November. in anticipated POS where You're but our lower see we right, it of accelerate December, American and the had general not is that

Angeles our City sales New flagship strong overall, store, process was in again, flagship really which as that was our in closed because of was impacted the We Los did York encouraging. we're store. store But, see the relocating

really look ultimately, We omnichannel we premium consumer believe a of a learnings experience. to. DTC optimizing progress continue on offering. there's in our We're footprint. strategy. XXXX, a to XXXX, There our our lot forward but We're a reaffirming to as driving are purpose-driven and retail strategy lot

and product our launch more to to new sharing store. we're revealing new soon looking soon. the of and forward detail in characters, timing, future that Again, new new going partnerships L. with opening of got course, you be flagship We've A. confident the

Linda Bolton-Weiser

Okay. Thank much. very you

Ynon Kreiz

Linda. you, Thank

Operator

comes question from Stephen next Your Goldman Sachs. of Laszczyk

Stephen Laszczyk

retail where year there for better Thank more better touch any than one the And levels a maybe you. was if Hot maybe you could And particularly Doll category, if example? Great. in are bit on Wheels just the categories a fared inventory. I spot? ended more better on in wondering little particular or worse inventory

they're as capital upgrade curious for in allocation, maybe to great see where two follow-up conversation stands And then other on what with November. the was was the credit and a it I that, about in Anthony, terms just agencies guidance it are repurchases share your year? a incorporated And Thank the that you're as maybe for upgrade for how you. of to this maybe magnitude looking relates of potential in thinking XXXX? the

Anthony DiSilvestro

Yes.

inventory retail inventory them. and with the no of With in agencies, dialogue terms category respect way of this to in in situation. results. So, over-indexes continuing terms there's -- either discussing our rating levels, we're materially that

see they take any, the that in what, if to we'll and near-term. So, have actions wait

were to where about good EBITDA X.X from really debt numbers X.X before. year, feel down our X.X from times down year the last We are,

made consistent So, in we've metric. improvement that

repurchases. share then And on lastly,

we what not but authorization, in a current forecasted remaining $XXX for million mentioned, of As of terms to share I are specific XXXX. our number ready have repurchases

Stephen Laszczyk

Thank it. Got you.

Operator

for We question. more time have one

Wolfe from question of final Research. Fred Wightman Your

Fred Wightman

I us the for in. higher just wanted in guys. about comp Hey expectation ask for Thanks incentive to squeezing XXXX.

you year-over-year. should million of XQ, I that $XXX year, assume how out guys really most just the about should quarter some at have hit of would year-over-year? sized fourth as book you the came think or in that we throughout I think it sequencing? move we but the to Do of that

Ynon Kreiz

good our this accrue as in The that reduction year, we fourth came update forecast. we predominantly year the year the quarter. in through adjust point. ratably But normal would a A and

Fred Wightman

targets when sort were you that of some be of of quarter, you that there about some Okay. I'm but comment a if wondering were that were market? And assuming would just guys earlier if then we expectation out the the XXXX prior if a was a always some last there, you're guide. you in topline sort assuming there that removed is new had putting think treatment participation film into film new participation or obviously numbers or the

Ynon Kreiz

consistently made participation. and that assumption in of terms We've fill Yes.

we that adjacencies our do franchise have get the included reporting of Some well. as category in

Fred Wightman

Great. Thanks lot. a

Anthony DiSilvestro

welcome. You're

Operator

question-and-answer the Ynon final to for Kreiz, turn the back remarks. now CEO, call session and would call. over for to I like concludes today's Chairman This

Ynon Kreiz

us everyone, you, Thank joining operator, thank and you, today. for

in Despite story few trajectory. the a the in more recap year multiyear to tell a of complete our Just quarter, results full context fourth the the challenges words. growth

and lower a financial positive demand, with the for we footing it As year, And and both in in the the the ended the POS POS positive in in and strongest quarter years. year been the as see, sheet, year, ratio. you every we've our can for see ratio, financial we strong region better position leverage quarter leverage and product in on stronger is balance

look plans We our about forward next year. are to and confident

Virtual Mattel team in strategy. the us. us great such everyone for want in Thank to for We XXXX, to a environment on our the an job joining join contribution will a also March. hope in and again Investors ongoing executing you entire doing I the thank global challenging for Presentation commitment

more to And We call information on soon. company. back now your share the interest in Dave. will Appreciate that

David Zbojniewicz

today. our Presentations Investors in replay you, website, this for section link at section will Eastern beginning PM thank Ynon, everyone, Thank be webcast and in and the The can corporate.mattel.com. call. X:XX available A for our of found today's call Events the call corporate joining participating of via webcast you, be Thank you of Time today.

Operator

your Ladies today's again, participation event. and thank gentlemen, today's for you in concludes call. This

You may now disconnect.

Mattel (MAT) 8 Feb 232022 Q4 Earnings call transcript